CBSE Class 12 Business Studies Solved Question Paper-2019 Set 1

CBSE Class 12 Business Studies Solved Question Paper-2019 Set 1

Business Studies
(Code No.  66/1/1)

Time allowed: 3 hours
Maximum Marks: 80

General Instructions:
Read the following instructions very carefully and strictly follow them :

(i) This question paper contains five Sections – A, B, C, D and E. 

(ii) Section – A contains questions 1 to 8 carrying one mark each. Answer to these questions may be given in one word or a sentence. 

(iii) Section – B contains questions 9 to 13 carrying three marks each, answers to these questions may be in 50 to 75 words. 

(iv) Section – C contains questions 14 to 19 carrying four marks each. Answers to these questions may be in about 120 words. 

(v) Section – D contains questions 20 to 22 carrying five marks each. Answers to these questions may be in about 150 words. 

(vi) Section – E contains questions 23 to 25 carrying six marks each. Answer to these questions may be in about 200 words. 

(vii) There is no over-all-choice in the question paper, however an internal choice has been provided in 3 questions of one mark, 2 questions of three marks, 2 questions of four marks, 1 question of five marks and 1 question of six marks. You have to attempt only one of the choices in such questions. 


                                                                                     Section – A

Question 1: Define ‘Workforce Analysis’. 

Answer: Manpower requirements involve two kinds of analysis, i.e., workload analysis and workforce analysis. Workload analysis involves determining the number and type of employees required to perform various jobs and achieve organizational objectives. Workforce analysis shows the number and type of human resources available with an organization.


Define ‘Selection’.

Answer: The process of selecting from a pool of prospective job candidates developed during the recruitment stage is known as selection. Even in the case of highly specialised professions with a relatively limited range of options ensures that the organisation best candidate.

Question 2: Appliances India Ltd. is engaged in manufacturing and distribution of home appliances since 1987. It has a good name in the market as the company is producing good quality appliances. It has separate departments for manufacturing, finance, sales, maintenance services and technical services to achieve specialization.  Since the areas of operations of the company have increased and customers have become more demanding, the company decided to modify the existing principle of management to meet the changing requirements of the environment. 

State the general principle of management which the company wants to modify to meet the changing requirements. 

Answer: The general management principle that the company wants to change is the Principle of Division of work, which states that work should be subdivided into small tasks/jobs, each performed by a professional.

It refers to dividing the work into different individuals. Fayol recommended that work of all kinds must be divided and allocated as per competence, qualification, and experience of individuals. According to Fayol, “Division of work intends to produce more and better work for the same effort. Specialization is the most efficient way to use human effort.” 

Question 3: How does Financial Market facilitate ‘Price Discovery’ of financial assets? 

Answer: The interaction of buyers and sellers in financial markets determines the price of traded financial assets. They act as a signal for the distribution of money in the economy based on demand and supply via a mechanism known as the price discovery process. This way financial market facilitates the price discovery of financial assets.

Question 4: Biru Nandan, Chairman of Lalit group of companies founded ‘Biru University’ for undergraduate and postgraduate courses in diverse disciplines. The Information Technology department of the ‘Lalit Power Ltd., had few vacancies related to Cyber Security. The Human Resource Department of the Company decided to recruit fresh engineering graduates from ‘Biru University’ for the same. 
Identify the type of source of recruitment. 

Answer: The source of recruitment is used by the company is External source of recruitment: Campus Recruitment. 

Campus Recruitment: Recruitments are also done through colleges and institutions of management and technology. These have become a significant source of recruitment for technical, professional, and managerial jobs. Several huge organisations keep close contact with universities, vocational schools, and management institutes to recruit qualified candidates for different kinds of jobs. Educational institutions are a widespread and normal practice for businesses for recruitment. 

Question 5: Varsha Jain after completing her fashion designing course from Indian Institute of Fashion Technology planned to enter into designer clothing venture. She had to address issues like her target customers, channel of distribution to be used, pricing policy etc. Identify the type of plan that Varsha Jain needs to develop to provide direction and scope to her organization in the long run

Answer: Here, Varsha Jain can use Strategy Plan for the organisation.

The term strategy is mostly used in military science and games. But in view of growing competition and a rapidly changing environment, now it has become equally relevant to the business organisation. In business, it refers to a comprehensive (i.e., determining long-term objectives, adopting a course of action, and allocation of resources)  and an integrated plan, which indicates the desired future of the organisation. It is very often said that a proper strategy is the blueprint of an organisation’s desired destination. It is an elaborate, systematic and special type of plan, which is formulated to meet the challenges forwarded by competitors or other external factors.

Question 6: State any two ‘Developmental Functions’ of Securities and Exchange Board of India. 

Answer: SEBI performs developmental functions to promote and develop the activities in stock exchange and to increase the business in stock exchange. The functions performed by SEBI under developmental functions are as follows:

i) It promotes the training of intermediaries of the securities market.

ii) It tries to promote the activities of the stock exchange. To do so, it adopts a flexible and adaptable approach in the following ways:

  • SEBI has given permission for internet trading through registered stock brokers.
  • In order to reduce the cost of issue, SEBI has also made underwriting optional.
  • Lastly, it has permitted initial public offer of primary market through stock exchange. 


What is meant by ‘Allocative Function’ of Financial Markets? 

Answer: Allocative Function: A financial market connects savers and investors by mobilising capital between them. In doing so, it performs an allocative function. It directs or distributes funds available for investment toward the most productive investment opportunity. The Allocative function of the financial market implies mobilising funds and channelling them into the most profitable use.

Question 7: Beena has been using ‘Klean’, a famous detergent available in the market. On watching numerous advertisements in the television, she decided to try a new brand of detergent. When she went to the near-by store to purchase the same, she saw detergents of other producers making similar claims of whiteness and stain-removing abilities. Hence she could not make up her mind as which detergent to purchase. 
Name the objection of advertising being discussed in this case. 

Answer: The objection to advertising raised in the question is that it “confuses the buyers” by making similar claims.

Confuses the Buyers: Advertisements confuse people as there is a continuous increase in the number of advertisements. Each brand claims to be the best through advertisements. For example, there are various advertisements for cement in India, like Ultra Tech Cement, Ambuja Cement, Dalmia Bharat, ACC, JK Cement, etc. These advertisements confuse the buyers as it is very difficult for them to make a choice.

Question 8: Give the meaning of ‘Physical Distribution’ as an element of Marketing Mix?

Answer:  The process of physically moving goods from the producer to the consumer is referred to as Physical Distribution. It is a significant marketing function that defines marketing operations that include the flow of raw materials from suppliers to factories for manufacturing as well as the movement of finished goods from production to the ultimate user.

According to prominent marketing expert Philip Kotler, “Physical distribution comprises planning, implementing, and regulating the physical movement of resources and end commodities from the place of origin of use to satisfy customer requirements at a profit.”


What is meant by ‘Marketing Management’?

Answer : Marketing Management is the art and science of identifying target audiences and establishing successful relationships with them. Marketing management is a process that includes analysing, planning, executing, and controlling goods, services, and ideas, with the purpose of producing satisfaction for all parties involved.

According to Phillip Kotler, Marketing Management is the analysis, planning, implementation, and control of programmes designed to create, build, maintain mutually, beneficial exchanges and relationships with target market for the purpose of achieving organisational objectives. 

Section – B

Question 9: JTM Ltd. launched ‘Buddyline’, an exercise book and comprehensive stationery brand name comprising of ball pens, gel pens and geometry boxes after identifying the target market and understanding the needs and wants of the consumers of that market. All their products were of good quality and eco-friendly but expensive. They wanted to distinguish their products from that of their competitors. They spent lot of efforts, time and money in creating the brand name, as they knew that without a brand name, they can only create awareness for the generic products and can never be sure of the sale of their products. The effort paid off and the demand for the products started growing. The customers liked the brand and became habitual to it. They did not mind paying a higher price. Over a period of time, it became a status symbol to buy ‘Buddyline’ brand because of its quality. The consumers felt pride in using them.

 (i) Identify the marketing management philosophy followed by JTM Ltd. 

(ii) Explain the advantages of branding to the marketeers highlighted in the above case. 

Answer: i) The Societal Marketing Concept’ is JTM Ltd.’s marketing management philosophy.

ii) Advantages of branding: 

  • Branding allows a company to clearly differentiate its product from the merchandise of other companies.
  • Branding allows customers to easily differentiate one product from another available on the marketplace. A good brand is perceived by consumers as a sign of authenticity and genuineness.
  • Effective branding builds client loyalty and habituation towards the product. The company can profit from this by charging a premium (usually a better price) for its product. A good brand name also helps to provide an initial boost to demand for the new product.
  • Established and well-known brands act as status symbols for consumers, providing them with psychological and social benefits.

Question 10: Mita has a successful ice cream business at Bikaner, namely ‘Smartflavours’. Her ice creams are utterly delicious. She makes ice creams from fresh milk and the same are available in a wide range of flavours and packs. She sets viable business objectives and works with the same in mind in order to ensure that the customers will come back for purchasing. Having the first mover advantage, her business was doing well. To earn higher profits, she started cutting costs. This would sometimes lead to delay in delivery and the ice cream was not reaching the market in time. Over a period of time, the demand for her ice cream declined and because of it the competitors entered the market. She lost some of her market share to competitors. At the beginning of summer season, she got back to back orders for supply of 4,000 ice cream packs of different flavours for special occasions. To ensure that the task was completed and orders delivered in time she hired additional workers. She was, thus able to produce and deliver the ice cream packs but at a high production cost. While completing activities and finishing the given task for achieving goals,
Mita realized that she was ignoring one of the important aspects of management.
Identify the aspects of management that has been ignored by Mita. Also, explain the same with the help of an example.

Answer: ‘Efficiency’ is an aspect of management that is being ignored. This is because efficiency implies accomplishing a task with the minimum level of cost and resources. If she needed to recruit additional workers to complete the task on time, she ignored efficiency and focused solely on effectiveness.

For Example: If more employees are employed and the task is finished on time, this is effective; but, if more workers are hired and the cost increases in the form of an increased salary, this is inefficient. Similarly, if a job is completed with the same number of people at a lower cost, it is efficient; but, if the task is completed with the same number of workers but there is a delay in the completion of work, it is ineffective.

At times, a company may focus more on producing goods with fewer resources, lowering costs while failing to achieve production targets. As a result, the goods do not reach the market, causing demand to fall and competitors to enter the market. Since the commodities did not reach the market, this is an example of being efficient yet ineffective. As a result, it is important for management to achieve goals (effectiveness) with minimum resources i.e. as efficiently as possible while keeping a healthy balance between effectiveness and efficiency.

Question 11: State ‘Job Enrichment’ and ‘Employee Participation’ as non-financial incentives. How do they motivate employees? 

Answer: Money alone cannot meet all of an individual’s requirements. Motivation is also influenced by psychological, social, and emotional aspects. Non-financial incentives mostly fulfil these requirements. Non-financial incentives may also have a monetary aspect at times. However, the focus is on providing psychological and emotional satisfaction rather than monetary satisfaction.

Job Enrichment: Job enrichment is the process of developing employment such that they include a greater range of work content, a better degree of skills and knowledge, giving employees more authority, and so on. Giving the employee more hard work and greater responsibility that needs more knowledge and expertise will motivate them to perform efficiently and effectively to achieve the organization’s goals.

Employee Participation: Participation has been considered a good technique for motivation. It implies the physical and mental involvement of employees in the decision-making process.  Employees feel important when they are asked to suggest their field of activities. It provides psychological satisfaction to the employees.

Question 12: Explain the objectives of Financial Planning.

Answer: Financial planning is the process of estimating the requirement of finance of a business specifying the sources and ensuring the availability of enough funds at the right time. 

Objectives of Financial planning:

  • To ensure that funds are available whenever they are needed: This includes a proper calculation of the funds required for various purposes such as the purchase of long-term assets or meeting day-to-day company expenditures, among many others. Apart from that, an estimated time is needed for when these funds will be made available. Financial planning also attempts to identify potential sources of these funds.
  • To ensure that the company does not invest heavily in resources: Excessive funding is almost as terrible as insufficient funding. Even if there is some surplus money, proper financial planning would put it to the greatest possible use so that the financial resources are not left inactive and do not add to the cost unnecessarily.


What is meant by ‘Financial Management’? State the primary objective of Financial Management. 

Answer: Financial Management is concerned with the management of the flow of funds and involves decisions related to the acquisition and application of funds in long-term and short-term assets. It is concerned with two aspects: procurement of funds as well as usage of finance. It aims to reduce the cost of funds obtained, keep risk under control, and achieve effective fund deployment. It also tries to ensure the availability of sufficient funds when required as well as avoiding idle finance. Needless to say, the future of a company is highly dependent on the quality of its financial management. The importance of financial management cannot be overstated, since it has a direct impact on a company’s financial health.

The primary objective of financial management is ‘wealth maximisation,’ which refers to making financial decisions that maximise the wealth of the shareholders. That is, to make financial decisions that are profitable for the company’s stockholders. In this context, shareholders are said to profit when the market value of their shares grows, which occurs when the benefits of the company’s financial decisions outweigh the costs involved. When financial decisions successfully accomplish the objective of wealth maximisation, other objectives such as proper fund utilisation, liquidity management, profit maximisation, and meeting financial obligations are automatically fulfilled.

Question 13: ‘Science is a systematized body of knowledge that explains certain general truths or the operation of general laws.’ In light of this statement, describe management as a science. 

Answer: Science is a systematised body of knowledge that explains certain universal facts or how general laws operate.’ Management is a science, but it is not an exact science.

Some of the reasons are :

  • Systematised body of knowledge: Management, like science, is a systematised body of knowledge with its own ideas and principles that have evolved through time. As a result, this element of science may be seen in management.
  • Observation and experimentation principles: Management concepts, like science, are derived via observation and repeated experimentation. As a result, this element of science may be seen in management. However, since management deals with people, the results of these tests cannot be predicted accurately.
  • Universal validity: Management principles, like pure science principles, provide managers with standardised techniques that can be applied in a wide range of situations. Since they have to be customized to a specified situation, their application and usage are not universal. As a result, this feature of science is not fully present in management.


Management is a complex activity that has three main dimensions. Explain these dimensions.

Answer: Management is a multidimensional process as it does not involve only one activity. The three main activities involved in management are Management of Work, Management of People, and Management of Opera

  • Management of Work: Every organisation is set up to perform some work or goal, and the management aims at achieving these goals or tasks. The work of an organisation depends upon the nature of Business; for example, work to be fulfilled in a hospital is treating patients, in a university is educating students, etc. 
  • Management of People: People are the most essential assets of an organisation and refer to human resources. It is the duty of the management to get the work completed through human resources/people by making their strengths effective and weaknesses irrelevant. Managing people have two dimensions; viz., Taking care of a group of people and Taking care of employees’ individual needs.
  • Management of Operations: Operations are the activities of an organisation’s production cycle, like purchasing inputs, converting them into semi-finished goods, and finished goods. Simply put, Management of operations consists of a mix of Management of Work and Management of People and decides what work has to be done, how it has to be done, and who will do it. 

Section – C

Question 14: Mahinder Agro Ltd. started a new venture for distribution of harmful and chemical fertilizers free vegetables. They conducted a survey to find out consumer preferences for such vegetables. They found that most of the consumers were concerned about the harmful chemicals being used in growing the vegetables. They found that 90% of the households were searching for its alternatives. The company contacted a group of agriculture experts to lay down the procedure for growing the vegetables by the farmers. They decided to train the farmers in new technology to grow chemical free vegetables according to new innovative methods. The experts also suggested soil management techniques through which farmers would be able to create an abundant and lasting harvest.
Identify and explain the two dimensions of business environment highlighted in the above para.

Answer: Two dimensions of business environment are: Technological Environment and Social Environment 

Technological Environment: The technological environment of a business refers to the broad features of science and technology in which a business enterprise operates. It includes forces relating to innovation and scientific development, which provides a newer base for producing goods and services, and also effective methods and techniques for operating a business enterprise. It consists of scientific advancements and inventions that enable new techniques of manufacturing goods, delivering services, and operating a business. Before launching its products, a company must first figure out the level of scientific development in a certain economy. The technological compatibility of products also influences the demand for a company’s manufactured items. The technological environment comprises technology advancements that create new commercial prospects for businesses. The new approach for growing chemical fertilisers in the present circumstance is related to the technology dimension of the business environment. 

Social Environment: The social environment of a business involves customs, cultures, and traditions that have lasted for many years. Any change in the social environment will affect the demand for a product, supply of labour, and capital. Business is a part of the society in which it operates, and cooperation between business enterprises and society will see a boom and will help in the growth of the enterprise. Whereas any confrontation between them may lead to a disaster, resulting in dissatisfaction amongst its customers and rejection of its products.  If the business enterprise failed to adapt to the changes, then its survival becomes difficult. They have to take care of the various forms of society and all economic activities must be focused on the scheme of social responsibility, like the same basis of wage payment for male and female workers, reservation of jobs for minorities, differently-abled people and women.

Question 15: Mega Ltd. holds an Annual Management Programme every year in the month of March in which the top managerial personnel formulate plans for the next year by analyzing and predicting the future to meet future events effectively. As they are responsible for providing direction to the organization, facts are thoroughly checked using scientific calculations. Detailed plans are prepared after discussion with professional experts. Preliminary investigations are also undertaken to find out the viability of the plan. Since it is an intellectual activity requiring intelligent imagination and sound judgement so it is mainly done by the top management. Usually rest of the members just implement the plans. Middle level managers are neither allowed to deviate from the plans nor are they permitted to act on their own. The top management ensures that the expenses incurred in formulating the plans justify the benefits derived from them. 
State any two limitations and any two features of planning discussed above.

Answer: Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen.

Limitations of Planning are:

  • Planning reduces creativity: Planning is an activity performed by top management. Typically, the rest of the members just follow up on their plans. As a result, middle management and other decision-makers are neither authorised to deviate from plans nor to act on their own. As a result, much of their initiative or creativity is lost or reduced. Most of the time, employees do not even bother to create plans. They simply execute commands. Thus, planning limits creativity in certain ways since people prefer to think along the same lines as others. Nothing is new or innovative.
  • Planning involves huge costs: When plans are developed, significant costs are incurred. These can be in terms of time and money, for example, confirming the accuracy of information might take a long period. To determine facts and statistics, detailed plans need scientific calculations. The costs paid may not always be justified by the benefits received from the plans. There are also incidental costs, such as boardroom meetings, discussions with professional specialists, and preliminary investigations to determine the sustainability of the plan.

Two features of Planning discussed above are:

  • Planning is futuristic: “The top management makes strategies for the coming year by evaluating and predicting the future to meet future occurrences efficiently”. Planning requires forecasting and preparing for the future. The goal of planning is to properly meet future occurrences towards the benefit of the company. It entails looking into the future, analysing it, and predicting outcomes about it. As a result, planning is viewed as a forward-thinking job based on forecasting. Forecasting anticipates future events and situations and makes preparations accordingly. For example, sales forecasting is the foundation upon which a business creates its yearly production and sales strategy.
  • Planning is a mental exercise: Planning requires the application of one’s personal mind, which includes foresight, intelligent imagination, and sound judgement. So because the action to b
    e conducted is determined by planning, it is basically an intellectual activity of thinking rather than executing. Planning, on the other hand, necessitates rational and methodical thought rather than guesswork or wishful thinking. In other words, planning thinking must be systematic and based on facts and projections.

Question 16: Viber Ltd. set up a manufacturing unit at Bhiwadi in Himachal Pradesh to manufacture electric geysers and supply them to dealers all over the country. Their production target was 500 geysers per week. It was decided by the management that variation in production up to 10 units would be acceptable. At the end of the first week, the production was 450 geysers. The next week, production increased to 470 geysers. A week later, production was 460 geysers. On investigation, it was found that fluctuation in production was due to irregular supply of electricity. 

(a) The above para discusses some of the steps in the process of one of the functions of management. Explain these steps. 

(b) Also, state the step(s) that have not been discussed in the above para. 

Answer: (a) The above para discusses Controlling steps in the process of one of the functions of management.

Step 1: Setting Performance Standards: The development of performance standards is the first step in the controlling process. The criteria by which actual performance is evaluated are known as standards. As a result, standards act as benchmarks for an organisation to strive towards. Standards can be set in both quantitative and qualitative ways. For example, standards set in terms of cost to be incurred, income to be generated, product units to be manufactured and sold, and time spent completing a task all indicate quantitative standards. Standards are sometimes specified in qualitative terms as well.

Step 2: Measurement of Actual Performance: Once performance standards are set, actual performance is measured. Performance should be measured objectively and consistently. There are various methods for measuring performance. Personal observation, sample verification, performance reports, and so forth are examples of these. Performance should be measured in the same units that standards are set as much as possible to simplify comparison. It is often assumed that measuring should take place after the work has been accomplished. However, if possible, work should be measured while being performed.

Step 3: Comparing Actual Performance with Standards: This step includes comparing actual performance against with the standard. This type of comparison will reveal the difference between the actual and desired results. When standards are stated in quantitative terms, comparison becomes easy. For example, a worker’s performance in terms of units produced in a week can be easily measured against the standard output for the week.

Step 4: Analysing Deviations: In all activities, some difference in performance can be expected. As a result, determining the acceptable range of deviations is important. Furthermore, deviations in critical areas of business must be handled more quickly than deviations in insignificant areas. A manager should use critical point control and exception handling in this situation.

(b) Steps not involved in the above is Taking Corrective Action.

Taking Corrective Action: Taking corrective action is the final stage in the controlling process. When deviations are within acceptable limits, no remedial action is necessary. However, when deviations exceed the acceptable range, especially in critical areas, prompt managerial attention is required to ensure that deviations do not occur again and standards are met. If the production target is not attained, corrective measures may include staff training. Similarly, if an essential project is falling behind schedule, remedial measures may include allocating more people and equipment to the project as well as granting authorization for overtime labour.

Question 17: Organising involves a series of steps that need to be taken in order to achieve the desired goal. Explain these steps.

Answer: Organising is a process that starts the implementation of plans by identifying tasks and working relationships and effectively deploying resources to achieve recognized and desired objectives (goals). Organizing is fundamentally a process that combines human activities, gathers resources, and merges both into a unified whole to be used to achieve certain goals.

Organising is the process of identifying and grouping work to be done, defining and allocating responsibility and authority, and forming connections to enable people to work most effectively together to achieve goals.

Organising involves a series of steps that need to be taken in order to achieve the desired goal:

  1. Identification and division of work: The first step in the organising process is to identify and divide the work that must be done in line with previously defined plans. The task is separated into manageable activities to minimise duplication and to distribute the burden of work among the employees.
  2. Departmentalisation: After work has been divided into small and manageable activities, then the activities that are similar in nature are grouped together. Such sets make it easier to specialise. This process of grouping is known as departmentalisation. Several criteria can be used to create departments. Territory (north, south, west, etc.) and items (appliances, garments, cosmetics, etc.) are two of the most commonly used grounds.
  3. Assignment of duties: It is vital to describe the tasks of various job roles and then assign work to diverse people. Once departments have been established, each is assigned to a person. Jobs are subsequently assigned to workers of each department based on their abilities and competencies. A proper match between the nature of work and the capabilities of an individual is required for efficient performance. The work should be assigned to individuals who are most suited to perform it effectively.
  4. Establishing authority and reporting relationships: Simply distributing tasks is not enough. Each employee must also know to who he must receive orders and to whom he is accountable. The establishment of such obvious relationships supports the formation of a hierarchical structure and helps in the coordination among numerous departments.


Explain any four points of importance of ‘Organising’.

Answer: Organising is a process that starts the implementation of plans by identifying tasks and working relationships and effectively deploying resources to achieve recognized and desired objectives (goals). Organising is fundamentally a process that combines human activities, gathers resources, and merges both into a unified whole to be used to achieve certain goals.

Organising is the process of identifying and grouping work to be done, defining and allocating responsibility and authority, and forming connections to enable people to work most effectively together to achieve goals.

The importance of Organising are:

  • Benefits of specialization: In an organisation, work is divided into units and departments. This division of work leads to specialization in various activities of the concern. The entire philosophy of the organisation is based on the concept of division of work into compact jobs. This leads to systematic allocation of jobs amongst staff, which enhances productivity and reduces the workload. Division of work refers to assigning responsibility for each organisational component to a specific individual or group. This, in turn, leads to specialization, efficiency and speed in job performance.
  • Clarity in a working relationship: After identification of a job, organising also clarifies the authority and responsibility of individuals of different departments. It is a means of creating coordination among different departments of enterprises. It aims at creating clear-cut responsibility, and authority relationships amongst different levels and ensuring cooperation among individuals and groups. Harmony of work is brought by the high level of management. Every employee knows his superior from whom he has to take the order, and to whom he has to report. This working relationship helps in fixing responsibility and helps to avoid confusion.
  • Optimum utilization of resources: Organising ensures the optimum utilization of human and material resources. In organising, work is assigned as per skill and knowledge. The clarity in the job in advance of what the employees are supposed to do avoids confusion and motivates employees to put in their best.
  • Adaption to change: The process of organising allows an organisation to accommodate changes in a business environment. So the organisation structure is suitably modified and the revision of the job position and relationships plan the way for smooth transactions. Thus organising provide flexibility and stability to an organisation. It helps an organisation to survive and grow, despite people leaving and joining. It also helps to adapt to changes in technology, new methods of work, etc.

Question 18: Stock exchange acts as a regulator of the securities market. It creates a continuous market where the securities are bought and sold. It gives investors the chance to disinvest and reinvest. Through this process of disinvestment and reinvestment, savings get channelized into their most productive investment avenues. To ensure that the investing public gets a safe and fair deal in the market, the membership of the stock exchange is well regulated and its dealings are well defined according to the existing legal framework. It also ensures wider share of ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments. Various functions performed by the Stock Exchange are discussed in the above para.
By quoting lines from the above para, state any four functions of stock exchange.

Answer: The Securities Contract and Regulation Act defines a stock exchange as, “An organisation or body of individuals, whether incorporated or not established for the purpose of assisting, regulating, and controlling of business in buying, selling, and dealing in securities.”

1. It creates a continuous market where the securities are bought and sold. It gives investors the chance to disinvest and reinvest. 

Ensure liquidity and marketability: A stock exchange’s primary role is to provide a continuous market in which securities are bought and sold. The presence of a stock exchange market ensures that investors may convert their investments into cash at any time. Because of the stock exchange, investors may participate in long-term investment projects without hesitation. Furthermore, investors may use the stock exchange to transform their long-term assets into short-term and medium-term investments. It allows investors to disinvest and reinvest. This gives liquidity and simple marketability to already existing market securities.

2. Through this process of disinvestment and reinvestment, savings get channelised into their most productive investment avenues.

Contributes to Economic Growth: On a stock market, securities from various companies are purchased and sold. This procedure of disinvestment and reinvesting in securities allows a trader to invest in the most profitable investment proposal. As a result, a country’s capital formation and economic growth increase.

3. To ensure that the investing public gets a safe and fair deal in the market, the membership of the stock exchange is well regulated and its dealings are well defined according to the existing legal framework. 

Safety of Transaction: The stock market only trades listed securities. Furthermore, the stock exchange authorities include the company’s name on the trade list only after they have validated the company’s soundness. Companies registered on the stock exchange must follow the strict rules and regulations imposed by the authorities, as this helps to ensure the safety of stock exchange trading. A stock exchange’s membership is well-regulated, and its dealings are well-defined under the current legal framework. This ensures that the investing public receives a secure and fair market deal.

4. It also ensures wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.  

Spreading of Equity Cult: To encourage people to invest in ownership securities, the stock market regulates new issues, offers improved trading standards, and educates the public about investing. ‘Stock exchange takes good measures in educating the public about investing’. It promotes broader ownership of securities.

Question 19: Explain any four points of difference between ‘Marketing’ and ‘Selling’. 

 Answer: Marketing: It is the process of recognizing and meeting people’s/customers’ needs. It focuses on the consumer’s demands and interests. It is a broad phrase that encompasses a variety of tasks such as first recognising the market, then customer demands, product creation to meet particular needs, price selection, and finally selling the to the customer. It sees the customer as the ultimate goal of business.

Selling: It is the process of developing and selling things to customers. It focuses on the seller’s demands and interests. It is merely an integrated element of the marketing process since its sole aim is to make products first and then sell them to customers, and it is primarily concerned with sales volume rather than customer satisfaction. It considers the customer to be the final link in the chain of business.

Difference between Marketing and Selling


Explain the following functions of marketing: 

(i) Product designing and development 
(ii) Standardisation and Grading 

Answer: Marketing is the process of recognizing and meeting people’s/customers’ needs. It focuses on the
consumer’s demands and interests. It is a broad phrase that encompasses a variety of tasks such as first recognising the market, then customer demands, product creation to meet particular needs, price selection, and finally selling to the customer. It sees the customer as the ultimate goal of business.

Functions of Marketing : 

(i) Product designing and Development: Product design and development is another major marketing activity or decision area. The product’s design helps to make the product appealing to the target buyers. A good design may increase a product’s performance while also giving it a competitive edge in the market. Producers should keep in mind that a product’s design is an important aspect in attracting buyers. A good design may help a product attract a big number of buyers. As a result, producers must pay close attention to product design and development. For example: when we decide to purchase a product, such as a motorcycle, we consider not only the elements such as cost and mileage, but also the design factors such as shape, style, and so on.

(ii) Standardisation and Grading: Standardisation refers to the production of goods to predefined specifications, which helps in the production of uniformity and consistency in output. Standardisation ensures that goods meet predefined quality, pricing, and packaging criteria and lowers the need for product inspection, testing, and assessment.

Grading is the process of categorizing things into different groups based on essential characteristics such as quality, size, and so on. Grading is especially important for items that are not manufactured according to preset requirements, such as wheat, oranges, and other agricultural products. Grading ensures that goods belong to a specific grade and helps in the realization of greater pricing for high-quality output.

Section – D

Question 20: Explain any five points of significance of Principles of Management.

Answer: The management principles are broad and general guidelines for decision-making and behaviour. These guide managers in taking actions and decisions. These principles are different from principles of science as they are not rigid. They are applied creatively to humans as per the needs and demands of the situation, so they are flexible.

Significance of Principles of Management:

  1. Providing Managers with useful insights into reality: Knowledge, ability and understanding of managers are improved with the help of principles of management, as they provide guidance. These principles also help to improve the efficiency of managers as they avoid the hit-and-trial method. They provide useful insights into real world situations. It also enables managers to learn from their past mistakes and take corrective actions in the future.
  2. Optimum utilisation of resources and effective administration: Physical, financial and human resources are utilised optimally with the help of principles of management. The cause and effect relationship avoids hit and trial method and reduces inefficiency and wastage of resources.
  3. Scientific decisions: Decisions taken with the help of principles of management are more realistic, practical and free from personal biases. They are made after repeated experimentation, therefore they minimize the chances of wastage of resources because the hit-and-trial method is not used. Thus, these principles facilitate scientific and balanced decisions. 
  4. Meeting changing environment requirements: Business environment is dynamic, and in order to survive in this fast-changing environment, businesses should adapt to the changes. Management principles guide managers to take corrective actions and help organisations to implement the changes to survive in the dynamic environment. 
  5. Fulfilling social responsibility: As businesses use resources of society, it is the duty of the business to perform social responsibilities. Principles of management not only help in achieving organisational goals but also help managers in performing social responsibilities. For example, the Principle of Remuneration focuses on giving just and fair remuneration to employees, irrespective of caste, religion, gender, etc. 
  6. Management training, education and research: As these principles are at the core of the management theory, they are used for training, education and research. These principles are also included in graduate and postgraduate courses, like B.Com, M.Com, BBA, MBA, etc. These principles help in the refinement of management practices by developing new techniques.


Explain the following techniques of Scientific Management: 

(a) Fatigue Study 
(b)  Differential Piece Wage System

Answer : 

Scientific Management: The utilization of scientific methods to solve management challenges is referred to as scientific management. It is the skill of understanding exactly what you want your staff to execute and ensuring that they do it in the most efficient and cost-effective way possible. It involves thoroughly researching each activity and carrying out the work in such a way that it is performed efficiently and effectively. F.W. Taylor established management as a science with essential principles. He was the one who proposed using scientific methods of measurement and study to solve managerial challenges.

Techniques of Scientific Management:

(a) Fatigue Study: It refers to determining the amount and frequency of rest intervals required in completing a work. Fatigue means tiredness from physical and mental work. Taylor suggested that a person gets tired when he works continuously without a break. So, he must be provided with a rest interval to regain his lost stamina. Fatigue study also helps in maintaining the operational efficiency of the worker. The amount and frequency of rest intervals should be decided through a fatigue study and not randomly. The fatigue study is conducted by observing workers while performing the job. It is also helpful to find out, how long a person can work without having any adverse effect on his health.

For example: At a plant, labour is often divided into three shifts of eight hours each. Even in a single shift, a worker must be allowed some time off to eat lunch, etc. If the task requires significant manual labour, short breaks should be taken periodically to allow the worker to replenish her/his energy level for maximum contribution.

(b) Differential Piece Wage System: This is a system in which efficient and inefficient workers are paid at different rates. According to Taylor, financial incentives act as a motivator. So, Taylor developed the concept of a differential piece wage system. In this technique, incentives are directly linked with productivity. Under this technique, first of all,  a standard task is established, and then two rates are fixed. Higher rates for those workers who produce more than the standard, and a low rate for those workers who do not produce above or equ
al to the standard.

For example, in a factory, the standard output is 20 units per day. Workers producing more than standard output will get 5 rupees per unit, for producing less than the standard, they will get 4 rupees per unit, and for producing less than the standard output, they will get 3 rupees per unit. If a worker produces 22 units in a day, he will get (22x 5)=110 rupees; a worker producing 20 units will get (20×4)= 80 rupees; and if a worker produces 19 units, then he will get (19×3)=57. The difference between different units is enough to motivate the workers to perform better.

Question 21: Voltage fluctuations have been common and quite high in India. They harm our electrical appliances like televisions, refrigerators and air conditioners, often leaving them in a permanently damaged condition. N-Guard Company decided to manufacture stabilizers for North India where the voltage fluctuation ranges from 220 V to 230 V. Once the demand for North India was taken care of, they decided to launch stabilizers of varying voltages from 90 V – 260 V for meeting the requirements of voltage fluctuations in other regions of India also. Three engineers were appointed for South, West and East regions of India, as the voltage was different in all the three regions. Though all the engineers were appointed to manufacture stabilizers but the product differed from region to region. 
(a) Identify the organisational structure of N-Guard Company. 
(b) State any two advantages and two limitations of the structure identified in the above para.

Answer: a) N-Guard Company follows a Divisional Structure. The N-Guard Company chose to appoint different engineers to each region. Despite the fact that all of the engineers were assigned to manufacture stabilisers but the products varied from region to region. The divisional structure activities are grouped on the basis of products or services that the business offers. 

When jobs related to one product are grouped under one department then it is termed a divisional structure. This type of structure is suitable for a large organisation that has several products. Under this method, a separate department is created for each major product. Each department is headed by a divisional manager, who has to carry out all functional activities related to the departments. Every department operates as a multifunctional unit because all necessary functions are performed over there. In this type of structure, each division work as a profit center, and the divisional head is responsible for the profit and loss of each division.

(b)Advantages of Divisional Structure:

  • Product Specialization: Divisional structure leads to specialization in a particular product because all activities related to one product are grouped in one department.
  • Greater accountability: In a divisional structure, each product department is treated as the profit centre. So, the departmental manager is accountable for his own profit and loss. This provides a base for measuring performance.
  • Flexibility: Divisional structure promotes flexibility because each division works as an autonomous unit. This thing leads to faster decision-making and allows greater flexibility to change in the environment.
  • Expansion and Growth: Divisional structure facilitates diversification and expansion of the organisation because a new division can be added without interrupting the existing decision.

Disadvantages of Divisional Structure:

  • Department conflicts: Conflicts may arise among different departments, such as production, marketing, sales, etc., with respect to the allocation of funds. A particular department may seek to maximize its profits at the cost of other departments.   
  • Costly: There is a duplication of physical facilities and functions. Each product division has to maintain its own facilities and personnel. It may lead to an increase in operating costs. Since there may be duplication of activities.
  • Ignore organisational interests: Divisional structure provides managers with the authority to supervise all activities related to a particular division. Managers focus on their own products without thinking of the rest of the organisation. Thus, organisational objectives suffer and become difficult to accomplish.  

Question 22 : Nisha Sethi was working as a Human Resource Manager in a famous consultancy firm, KLI Global Services. Her job included preparing job descriptions, recruitment, developing compensation and incentive plans and facilitating employee learning. They had entered into alliances with institutes to ensure continuous learning of their employees. With the jobs becoming more and more complex, KLI Global Services invested large amount of money in making the employees learn the skills necessary to complete the jobs.  
State by giving any five points, how this investment is likely to benefit the organisation.

Answer: Training is the process of improving an organization’s employees’ skills, talents, and capabilities. Employees benefit from training because it allows them to learn new skills and put their knowledge to use. It is not only required for new employees but it is also required for the existing workforce. This is not a one-time task. It is a continual process that helps employees improve their performance and prepares them for a new job or keeps them up to date on their current position. It is a systematic technique that advises employees and trains them on how to handle the responsibilities that have been assigned to them. Employee training is crucial because workers should be kept updated on technological advancements and new developments.

Benefits of Training to Organisation:

  • Reduces production costs: Training is always preferable to hit-and-trial approaches, which are often a waste of time and effort. Training, on the other hand, is a systematic method to learn and skill-building for employees. Employees work economically, utilise resources efficiently, minimise material waste and reduce production costs.
  • Increased productivity: A well-trained employee is more productive and produces higher-quality work than an unskilled person. Employees’ skills in doing a certain task improve as a result of training. An increase in abilities usually helps in increasing both the quality and quantity of output.
  • Prepares future managers: Training helps all employees, new and old. It also trains future managers to take over the organisation in the event that the current manager is unable to do so due to an emergency.
  • Better response to rapidly changing environment: Training keeps employees up to date on organisational changes and enhances their response to rapidly changing business environments, whether technical or economical.
  • Staff morale improves: Employee morale will improve if they receive good training. A successful training programme will change employees’ attitudes in order to get support for organisational activities as well as improve greater cooperation and loyalty. Employee unhappiness, complaints, absenteeism, and turnover can all be decreased with the help of training.
  • Reduces accidents: Employees are given sufficient training on how to ha
    ndle machinery or the system on which they are working, which helps to decrease accidents in the workplace.

Section – E 

Question 23: ‘Determining the relative proportion of various types of funds depends upon various factors.’ Explain any six such factors.

Answer: Capital Structure refers to the proportion of debt and equity used for financial business operations. Capital structure decisions involve determining the types of securities to be issued as well as their relative share in the capital structure. The financial decision regarding the composition of the capital structure is made after the financial requirements have been established. It entails determining how much money should be raised from each source of funding. In short, capital structure decisions involve determining the type of securities to be issued and their relative capital share.

For Example, Debt must be serviced on a regular basis. A business should pay interest payments and principal repayments. Furthermore, a firm that intends to grow debt must have enough cash to cover the additional outflows caused by increasing debt. 

Factors determining the relative proportion of various types of funds are:

  1. Cash Flow Position: The capital structure’s composition is determined by the company’s ability to generate cash flow. When choosing a capital structure, it is essential to consider future cash flows. The company’s funds must be adequate to fund corporate operations, invest in fixed assets, and fulfil debt obligations such as interest and capital repayments. The company must pay preferred shareholders dividends, debenture holders fixed-rate interest, and loan principal and interest. A company may earn a reasonable profit yet be unable to provide cash inflow for payments. If the corporation fails to meet its financial commitments, it may become bankrupt. As a result, the predicted cash flow must meet the payment requirement. If a business is confident in its ability to generate sufficient cash flow, it should use more debt securities in its capital structure; however, if cash is limited, it should use more equity securities since it has no obligation to pay its equity owners.
  2. Equity Cost: Another factor that determines capital structure is the cost of equity. The use of debt capital impacts the rate of return on equity that shareholders expect. As more debt is used, the financial risk that shareholders must face increases. When the risk increases, so do the required rate of return. As a result, debt should be utilised with caution. Any usage in excess of the limit raises the cost of equity, and even if the EPS is higher, the share price may decline.
  3. Floatation Costs: It is the cost incurred while issuing shares or debentures. It includes expenses such as advertising, underwriting, brokerage, stamp duty, listing charges, statutory fees, and so on. Before making a decision, it is important to thoroughly assess the expenses of raising funds from different sources. Issuing shares and debentures involve additional formalities and costs. However, raising funds through loans and advances is less costly.
  4. Tax Rate: High tax rates minimise the cost of debt because interest paid to debt security holders is deducted from income before calculating tax, whereas corporations must pay tax on dividends paid to shareholders. Thus, a high tax rate reflects a preference for debt in the capital structure, whereas a low tax rate shows a preference for equity. 
  5. Risk Consideration: As we all know, using debt raises a company’s financial risk. Financial risk is a situation in which a firm is unable to satisfy its set financial expenses, such as interest payments, preferred dividends, and repayment obligations. Aside from financial risk, every business faces operational risk (also known as business risk). Fixed operational costs determine business risk. Higher fixed operational costs increase company risk, and vice versa. The overall risk is determined by both the business and financial risks. If a company’s business risk is lower, its ability to use debt is greater, and vice versa.
  6. Regulatory Framework: Every company is required to adhere to the legal framework when deciding on its capital structure. When issuing shares and debentures, the SEBI guidelines must be followed. Bank and other financial institution loans are also subject to a number of regulations. Companies may prefer to issue securities as a source of additional capital if SEBI requirements are simple, or they may want to provide more loans if monetary policies are more flexible.


Explain any six factors affecting the decision that determines the amount of profit earned to be distributed and to be retained in the business.

Answer: The Dividend Decision involves determining how much of the company’s net profit should be distributed to shareholders and how much should be retained in the business.

Dividends are the portions of profits that are allocated to shareholders. The decision at issue is how much of the company’s profit (after taxes) should be paid to shareholders and how much should be retained in the business. While dividends represent current income reinvestment, retained earnings increase the firm’s future earning capacity. The proportion of retained earnings also determines the firm’s financing decision. Because the business does not require funds to the extent of re-invested retained earnings, the dividend decision should be made with the overall goal of maximising shareholder wealth in view.

There are various factors that affect the dividend decision. These are as follows:

  1. Amount of Earnings: Dividends are paid out of the current and previous year’s earnings. More earnings will ensure greater dividends, whereas fewer earnings will lead to the declaration of a low rate of dividends.
  2. Stability of Earning: A company that is stable and has regular earnings can afford to declare higher dividend as compared to those company which doesn’t have such stability in earnings. 
  3. Stability of Dividend: Some companies follow the policy of playing a stable dividend because it satisfies the shareholders and helps in increasing companies reputation. If earning potential is high, it is declared as a high dividend, whereas if the earning is temporary or not increasing, then it is declared as a low or normal dividend.
  4. Growth Opportunities: Companies with growth opportunities prefer to retain more money out of their earnings to finance the new project. So, companies that have growth prospects in near future will declare fewer dividends as compared to companies that don’t have any growth plan.
  5. Cash flow Position: Payment of dividends is related to the outflow of cash. A company may be profitable, but it may have a shortage of cash. In case the company has surplus cash, then the company can pay more dividends, but during a shortage of cash, the company can declare a low dividend. 
  6. Taxation Policy: The rate of dividends also depends on the taxation policy of the government. In the present taxation policy, dividend income is tax-free income to the shareholders, so they prefer higher dividends. However, dividend decision is left to companies.
  7. Stock market reaction: The rate of divide
    nd and market value of a share are directly related to each other. A higher rate of dividends has a positive impact on the market price of the shares. Whereas, a low rate of dividends may hurt the share price in the stock market. So, management should consider the effect on the price of equity shares while deciding the rate of dividend.

Question 24: ‘VOICE’ is an important consumer organization. It organized workshops in the months of December in Delhi/NCR for consumers. The theme was ‘Organic Food – From Farm to Plate’, to spread awareness on the importance of organic farming and to encourage consumers to switch from conventional food, that contains chemicals and pesticides to organic food. Expert speakers from farmers’ community explained the harmful effects of usage of pesticides in farming and the importance of organic food. People were informed that the organization regularly tests samples to detect adulteration like presence of heavy metals or pesticides. The results of the tests are published in their monthly magazine ‘Consumer Voice’ to make people aware of quality of different products. It also provides aid and legal advice to the consumers in seeking a remedy. 
State the functions performed by the Consumer Voice for the protection and promotion of consumer interest by quoting lines from the above para

Answer: Several consumer organisations and non-governmental organisations (NGOs) have been formed in India to safeguard and promote the interests of consumers. Non-governmental organisations are non-profit organisations that work to improve people’s lives. They have their own constitution and are not subject to government interference. Consumer organisations and non-governmental organisations (NGOs) serve a wide range of functions to safeguard and promote the interests of consumers.

Consumer organisations play an essential role in educating consumers about their rights and protecting them. These organisations can force businesses to avoid consumer exploitation and malpractice.

(i) It organized consumer workshops in Delhi/NCR in December. The theme was ‘Organic Food – From Farm to Plate,’ with the goal of raising awareness about the value of organic farming: 

Educating the general public about consumer rights through the organisation of training programmes, seminars, and workshops. These organisations motivate people to ask for the quality of products, such as Agmark, Hallmark, etc., while making a purchase.

(ii) Encouraging customers to convert from conventional food containing chemicals and pesticides to organic food:

These organisations motivate customers to protest and take action against sellers’ and manufacturers’ unfair trade practices and exploitative behaviours.

(iii) The results of the tests are published in their monthly magazine ‘Consumer Voice’:

It is essential for the consumers to attain full knowledge of consumer problems, reliefs available, consumer rights, responsibilities, etc. It is the duty of consumer organisations to impart such knowledge to consumers through the publishing of periodicals and other publications. Publishing journals and other publications to spread information about consumer issues, legal reporting, accessible relief, and other topics of interest.

(iv) People were informed that the organization regularly tests samples to detect adulteration like presence of heavy metals or pesticides:

To provide information to the consumers and to benefit them, the consumer organisations carry out comparative testing of the consumer products in accredited laboratories, so they can check and confirm the relative qualities of the competing brands, and publish them for the consumers. 

(v) It also provides aid and legal advice to the consumers in seeking a remedy:

They take the initiative by filing complaints in consumer court on behalf of the general public and villagers, instead of any one person. These organisations assist government authorities in resolving consumer exploitation complaints and promoting consumer awareness programs. They also file consumer grievances in consumer court on their behalf. Consumer organisations help customers in pursuing legal assistance by providing legal advice, aid, and other services.

Question 25: Pratap Singh is the Chief Executive Officer of Nissar Enterprises. It is an automobile parts manufacturing company. The enterprise has a functional structure, in which jobs of similar nature have been grouped together as Production, Finance, Marketing and Human Resource. Nissar Enterprises has its manufacturing unit at Manesar. The factory has been plagued with many problems for a long time which was in the knowledge of the Production Manager, Varun Sharma. The workers had internal differences. Time and again, there were misunderstandings between the management and the workers. Keeping the problems in mind, Varun Sharma appointed Siyaram Singh who had 14 years of experience of working with the actual workforce and passing on instructions of the middle management to the workers. Siyaram Singh met Varun Sharma to understand what the management wanted. Thereafter he met the workers and conveyed the ideas of management to them. He also promised the workers to convey their problems to the management. In this way, he cleared the misunderstanding between the management and the workers. He also sorted out internal differences and was able to unite the workers within a month of his joining. His work was acknowledged by management and he was given a certificate of good performance along with a 10% increase in salary.

(i) Siyaram Singh performed some of the functions which are required to be performed at the position he is working at. State any five other functions Siyaram Singh is expected to perform. 

(ii) Name the incentives provided to Siyaram Singh. 

Answer: (i) Siyaram Singh worked at the operational level of management, where his primary responsibility was to engage with workers and communicate middle-level management instructions to them, as well as to listen to workers’ concerns and grievances and convey them to middle-level management.

Foremen and supervisors are located at the lower of the organisational hierarchy. Supervisors have direct control over the workforce’s efforts. Their power and duty are constrained by the plans devised by top management. Supervisory or operational level management is especially important in the organisation since they contact the real workforce and pass on middle management instructions to the workers. Their efforts ensure that output quality is maintained, that material waste is minimised, and that safety regulations are maintained. The quality and quantity of production are determined by the workers’ hard work, discipline, and loyalty.

Functions Performed by Siyaram Singh(Supervisory or Operational Level Management):

  1. Issuing orders and instructions: At the operational level, management give orders to employees and supervisors as well as instructions on their roles, responsibilities, and authority. Furthermore, these supervisors have control over how the workers function.
  2. Activity plan preparation: Lower-level
    managers plan the organization’s day-to-day operations. Furthermore, managers assign tasks to subordinates, assist them through the process, and take corrective measures as necessary.
  3. Allocating and assisting with work: The lower level managers’ job or responsibility involves assigning work to subordinates and assisting them with their work. They accomplish this by describing the job routine to the staff and resolving any issues that arise in order for them to perform better.
  4. Representing employees’ concerns: As managers at the lower level of management have direct contact with managers at the middle level of management, they listen to workers’ problems and report them to the middle-level managers and ensure the workers to resolve their problems.
  5. Providing a safe and suitable work environment: Lower-level managers are accountable for providing a safe and proper work environment to their employees. They must also maintain proper discipline and a positive climate inside the firm since this motivates individuals to work hard towards achieving corporate goals as well as personal goals.
  6. Assisting middle-level management: Managers at the operational level help middle-level managers in selecting, training, placing, and promoting an organization’s workers because they can provide direct insight into what is required for the achievement of organisational goals and the performance of the workers.
  7. Encourage employee initiative: The greatest method to excite workers and make them feel like they are a vital part of the business is to encourage them to take initiative. Lower-level managers do this by accepting their suggestions and ideas and rewarding them for excellent ones.

ii) Incentives provided to Siyaram Singh are both Financial and Non-financial incentives as he has been given a 10% increase in salary(Financial Incentive) and a certificate of good performance(Non-financial Incentive).

Financial Incentives are those incentives that can be calculated in terms of money. Money plays a great role in satisfying the needs of a person to obtain a social position and power. It not only satisfies lower-level needs but also satisfies higher-level needs, such as social status, power, etc. These monetary incentives are provided to motivate people for better performance. These incentives can be provided to both individuals and groups.

Pay and allowance: Salary is the basic monetary incentive for every employee. It includes basic pay, dearness, allowances, house rents, conveyance, etc.  In some business organizations, pay hikes and increments may be linked to performance.

Non-financial incentives refer to incentives or rewards which cannot be measured in terms of money. All the needs of individuals are not satisfied by money only. Psychological, social, and emotional factors also play an important role in providing motivation.

Employees Recognition Program: When an employee performs well, then he wants to be praised by his superiors and fellow employees. When such appreciation is given to the employee, then he feels motivated to perform better in the future.  Employees are rewarded in the form of congratulations and through the distribution of certificates and mementos, displaying employee’s achievements, etc.